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Bitcoin’s Sizzling July: The Cryptoverse Heats Up

Logan by Logan
August 2, 2022
in Business
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Bitcoin’s Sizzling July: The Cryptoverse Heats Up

Image Source- Pixabay

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The price of bitcoin has had a good month for the first time in a while.

After falling for several months, it increased by more than 17 percent in July, its greatest result since October. Since January 2021, ether has increased by 57 percent, its biggest monthly growth.

Investors believed that economic weakness would prevent the Fed from quickly tightening monetary policy, which is why the rally coincided with advances in riskier assets like equities.

The 40-day correlation between Bitcoin and the tech-focused Nasdaq (.IXIC) is now 0.90, up from 0.41 in January. A correlation of 1 indicates that their prices move in unison.

Since late November, the primary cryptocurrency has been favourably correlated with the Nasdaq, in contrast to previous years when it would frequently turn negative, signifying they travelled in the opposite direction.

Itai Avneri, deputy CEO of bitcoin trading website INX, described the convergence in July as “good news.”

“It means institutional investors are looking at bitcoin like any other asset,” he said. “When the market turns – and it will turn – these institutions will come back and invest in crypto.”

Gains were not limited to bitcoin; according to CoinGecko data, the market capitalization of all cryptocurrencies surpassed $1.15 trillion last month, up more than $255 billion from the end of June.

According to data firm CryptoCompare, assets under management in digital asset investment products increased 16.9% to $25.9 billion in July, reversing a decline of 36.8% in June.

Image Source- IMF Blog

Trading volume has been low, signalling that many investors believe it is too early to turn optimistic given the macroeconomic backdrop’s extreme uncertainty, which includes runaway inflation, an impending recession in America and Europe, the collapse of some major cryptocurrency players, and many other factors.

CryptoCompare reports that the average daily volumes for all digital asset investment products fell by 44.6 percent to $122 million, the lowest level since September 2020.

“On a medium-term horizon, we’re bearish (on crypto) despite the current bounce, this aligns with our stance on equities,” on Friday, experts at MacroHive published a report noting inflation, recession concerns, and rate increases.

After surpassing $24,000 last week, the price of bitcoin is now stable at $23,336, trading at a steady distance from it.

According to Chris Terry, vice-president at lending platform SmartFi, it will probably continue to trade in a narrow range of roughly $20,000, plus or minus 10% to 15%, until there is more clarity regarding the economy’s trajectory.

“We could be in this stalled market for weeks and weeks.”

On the other hand, according to Russell Starr, CEO of Valour, which develops exchange-traded products for digital assets, if the United States experiences a protracted recessionary period and the Fed is compelled to lower interest rates, bitcoin may profit.

“You’re going to have to see another quarter of recession before you see a resumption back up to the lofty $60,000 levels,” he said.

According to Adrian Kenny, senior sales trader at GlobalBlock, the upcoming few months could be quite difficult for investors who bought into cryptocurrency during its boom at the height of loose monetary policy during the pandemic.

“There is still an undoubtedly considerable mountain to climb in terms of ‘normality’ or the hopes of a return to the highs of 2021 anytime soon.”

Tags: BitcoinBitcoin beats the heatBitcoin on riseBitcoin's Sizzling July: The Cryptoverse Heats UpcryptomarketCryptoverse heats up
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